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Tick Tock: The World Is in Debt & Out of Time


Written by John Rothans

Apr 16, 2019

Time is ticking on the debt clock. And the ticking keeps growing louder.

Everywhere, it seems, debts are ballooning. Global debt tipped the scales at an all-time high of $184 trillion in 2017, according to the International Monetary Fund. Now, the Institute of International Finance reports that global debt is closer to $244 trillion.

In the United States, two of the soaring debts that demand immediate attention are the national debt and corporate debt. These twin debts represent a potential double whammy for the economy—and potentially for you, too.

U.S. Money Reserve's latest special report dives into the various forms of debt facing the United States and many other countries. Here’s a special preview of what’s in the report. Download the full report for free to see the full picture.

U.S. National Debt

It's on track to undermine the fight against the next financial crisis

The national debt can be divided into two parts:

  • Debt held by the public, or those who buy U.S. bonds.
  • Intragovernmental debt, which the government owes to itself or other federal agencies.

In February 2019, the national debt jumped to a record-setting $22 trillion—the largest sovereign debt in the world, per MarketWatch. As a share of the U.S. economy, the national debt has more than doubled in the past 10 years, thanks mostly to the housing crisis and the subsequent Great Recession.

In a February 2019 opinion piece published by The Hill, banking and monetary policy consultant Bert Ely warned of a “fiscal day of reckoning” if lawmakers and government officials in Washington, D.C., fail to “confront the very damaging consequences” of soaring national debt. If they don’t do so, then the pain of the next economic downturn “will likely be extremely severe,” Ely wrote.

U.S. National Debt Clock: Real Time

U.S. Corporate Debt

It’s poised to push once-trusted companies into bankruptcy.

The consequences of spiraling corporate debt could also be extremely severe.

In the past decade, U.S. corporations have taken advantage of historically low interest rates to grow their businesses, gobble up competitors, engage in a flood of stock buybacks, and juice their balance sheets. They’ve acquired trillions in cheap loans, driving corporate debt well beyond levels seen during the Great Recession.

U.S. corporate debt now stands at about $6.3 trillion, expanding 80% since the financial crisis—creating the largest corporate debt load in history. The year 2019 is a dangerous time to be sitting on old loans at old rates, particularly in the late stages of an economic expansion, with recession whispers in the air and borrowing costs on the rise.

As with the national debt, a grim day of reckoning looms large for corporate debt. Higher costs of borrowing and refinancing could eat into corporate profits, and once-profitable companies could be thrust into bankruptcy.

Curious about which debts other than the U.S. national debt and corporate debt pose harm? Download the latest special report today!

Debt Is Not Your Friend

It can lead to higher interest rates, taxes, and trouble

Debt seems like one of those necessary evils. After all, deficit spending does drive growth. You’re told that a certain degree of debt is sustainable, even essential, to expand the economy.

Some advisors even maintain that debt is a form of wealth. As long as interest rates stay low and countries continue to buy U.S. bonds, you’ll be just fine, right?

The United States might be able to assume more debt than most other countries can, given America's robust economy, solid payment history, and attractive repayment times—at least for now.

But let’s say the economy stumbles. What then? Will the United States struggle to make the bare minimum payments on its debt? Almost every viable strategy for reducing the debt load could hit consumers in the pocketbook short-term and long-term—and this should worry you.

Rising federal debt and deficits cause the government to issue bonds or debt securities to prop up the federal budget. Interest rates and bond prices have an inverse relationship, so when too many bonds flood the market, the price of government securities drops—and interest rates subsequently rise.

Rising interest rates affect how much it costs to buy a house or a car or finance an education. They also increase the costs of borrowing money to start or expand a business.

Ultimately, that could mean less money in your pocket and less to stash in a 401(k), IRA, or other retirement account.

High debt—both the national and corporate varieties—also can slow economic growth and drag down the economy.

The Debt Defense

Learn what you can do to help protect your financial future

In light of the gloomy outlook for national and corporate (not to mention consumer debt and various other kinds of debt), it’s time to go on debt defense and encourage government officials to rein in spending and enact the reforms necessary to balance budgets and pay down national liabilities. It’s also important for each person to establish a personal emergency fund and engage in aggressive individual asset protection.

Over the next decade, the U.S. national debt might overtake the entire economy, with corporate debt entering a danger zone.

All the while, central banks, among others, have increasingly been viewing physical gold as a hedge against the ballooning debt crisis. This confirms gold as a critical diversification tool.

In the face of slowing global growth, a weakening dollar, and unstable financial markets, gold can provide everyday savers with strategic crisis protection. And it offers diversification of retirement portfolios for consumers desiring a safety net amid an uncertain and indebted world.

The dramatic rise in debts across the board has pushed the nation—even the world—into uncharted waters, and there’s little doubt that those holding paper assets should seek a safe harbor for their money. And that safe harbor very well could include gold.

To learn more about the ticking debt clock and how it could affect you, download the latest special report. But don’t stop there. Call U.S. Money Reserve to set up a debt defense plan that includes a shield of precious metals. Account Executives are standing by at 1-844-307-1589.

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